Dell_20181213

A Bumpy Ride Ahead!

April 2019

Digital transformation sounds like a win-win; with budgets under increasing pressure, it sounds logical to improve digital processes, save money, and work more efficiently. However, resistance and fear of change is a major issue in just about every organization, across all sectors.

Digital transformation has moved in to the essential driver of strategic business growth and productivity, but achieving digital transformation is a challenging process. According to IDC, global spending on digital experiences (DX) will reach a staggering USD 1.7 trillion globally by the end of 2019.

Everybody from IT and telecommunication firms to manufacturers, banks, and utilities strive to bring a little order to their chaotic data operations. For the typical enterprise, the prize at the bottom of the automation box is the ability to manage bandwidth consumption more effectively and extend visibility into distributed data environments, which are already moving past the cloud to the Internet of Things (IoT) edge.

While big data, analytics, cloud, IoT, and machine learning play a key role in digital transformation and enabling new levels of enterprise productivity, the transformation really starts with the network – the framework that connects and supports every other element. This must be underpinned with fundamental technology including centralized IT monitoring.

The field is varied, of course, and represents everything from new physical infrastructure to virtual or software-defined solutions in the data center, the cloud and on the edge. The goals are wide-ranging as well. New solutions are expected to reduce latency, increase flexibility, and simplify management burdens, even as they lower costs and streamline the overall network footprint.

The key to all this activity is the open API framework that allows third-party systems to interact with the platform from all directions.

Artificial intelligence (AI) is also fueling this process, particularly the machine learning (ML) algorithms that are making connectivity to IoT not only possible but optimal. AI will likely produce a boom in hardware sales that will drive the market from today’s USD 3.5 billion to USD 115 billion by 2025, according to Tractica. Initially, much of this activity will come in the form of acceleration hardware on the compute side of the data environment, but both storage and networking are likely to see major innovations going forward in order to optimize AI workloads end-to-end. It is also likely that hardware constructs will become more specialized for individual AI workloads, particularly as applications become more adept at provisioning their own resources. AI workloads are also likely to produce a rise in field-programmable gate arrays (FPGAs) on the network and elsewhere. AI workloads are different from traditional analytics workloads, and will need faster, more versatile networks to accommodate them.

It is becoming increasingly viable for enterprises to customize network hardware solutions. And while high levels of customization are taking root on virtual architectures, the physical layer is becoming increasingly generic. But even that may be about to change now that the ability to program, and thus customize, network hardware, and even basic silicon, is starting to creep into the latest solutions. By itself, the hyper-converged infrastructure (HCI), which is usually built on white-box, modular hardware, presents a number of inefficiencies, particularly in areas like scalability. This is why manufacturers are already turning to composable-disaggregated infrastructure (CDI), which provides more flexibility when deploying varying amounts of compute, storage, and networking. But even this is not enough without a virtual layer that can pool these resources, so they can be tailored to the consumption needs of individual workloads. A programmable fabric is crucial to this effort because it provides the necessary connectivity to selected resources within and between clusters, and it can do so at the speed of a modern, automated data environment.

The trend of custom chips replacing generic software is expected to be kicking into high gear in the coming year as functions like virtualization, graphics, and HPC start to push performance and efficiency requirements. All of this customization and programmability will put an end to the many strictures that have inhibited data performance thus far, ushering in an entirely new era of data productivity.

2019 Ahead

There are a number of different trends that will likely manifest over the course of the next couple of years.

Broadband speed will improve. Wi-Fi 6 is an upgrade on the current highest speed Wi-Fi protocol in wide use, 802.11ac and will bring a dramatic improvement in efficiency across all existing Wi-Fi bands, including older 2.4GHz frequencies. Wi-Fi 6 will also likely get new spectrum in the 6GHz band in 2019 or 2020, further improving its speed. Wi-Fi 6 products are expected to be introduced in 2019, which will improve the experience for almost all wireless users, who will find that their devices communicate more reliably and quickly in crowded offices. Wi-Fi 6 will also support larger constellations of low-powered IoT devices using fewer access points,

Research from Cisco’s visual networking index (VNI) predicted that broadband-speed improvements will result in increased use of high-bandwidth content and applications. The global average broadband speed continues to grow and will double from 2017 to 2022, from 39.0 Mbps to 75.4 Mbps. Globally, the average mobile network connection speed in 2017 was 8.7 Mbps. The average speed will more than triple to 28.5 Mbps by 2022. The average Wi-Fi network connection speed (24.4 Mbps in 2017) will exceed 54.2 Mbps by 2022. North America will experience the highest Wi-Fi speeds, 83.8 Mbps, by 2022.

5G and the rise of edge computing. 5G, will be deployed by carriers of all sizes over the next couple of years. While 5G deployment is a service provider issue, how it helps to enable organizations with different use cases is an enterprise networking concern.

With 5G, edge computing becomes a reality. The expanded bandwidth and lower power consumption used by 5G enables more edge-of-network deployments, whether it is for standalone IoT devices or for edge-computing deployment. With an edge-computing deployment, compute resources are remotely deployed and connected via 5G.

Cloud-native functions will emerge. In years past, virtual network functions (VNFs) and network function virtualization (NFV) were all the rage, but that will evolve in 2019 with the concept of cloud-native functions.

Intent-based networking will mature. The concept of intent-based networking is one that Cisco first began to advocate in June 2017 as a way to bring intelligence, automation, and software-defined networking (SDN) together.Multiple vendors in 2019 are now positioned with various approaches to intent-based networking, and it is a trend that will likely continue as organizations learn more about the concept and its benefits.

SD-WAN will continue to grow. Buying MPLS private connections is expensive, and always has been challenging to set up as well. SD-WAN emerged on the scene a few years ago as an alternative, providing organizations with a way to bundle multiple public internet links to enable WAN connectivity.

2.5/5/25/50 GbE networking gets real.For the last decade, 1 Gigabit Ethernet has been the standard used to connect enterprise desktops and wired connected devices. In 2019, some 2.5 and 5 Gbps Ethernet-enabled switches and network interface cards (NICs) that take advantage of the IEEE 802.3bz standard are being introduced. With 802.3bz, enterprises can get up to 5× the bandwidth out of existing cabling infrastructure.For server infrastructure, 10 Gigabit Ethernet has been the workhorse of the past decade, but that is also shifting with increasing volumes of 25 and 50 Gigabit Ethernet-enabled switches. More than just 1 and 10 Gigabit Ethernet in 2019 are expected as vendors push out new options.

IPv6.2019 will not be the year that enterprises all magically move to IPv6, but IPv6 adoption is not a trend that enterprise networking professionals can ignore.While IPv6 will not overtake IPv4 usage in enterprises in 2019, IPv6 will likely become just a bit more prominent than it has been in years past.

It’s hard to say what the network will look at after the transformation is complete. For sure, it will be more abstract, more automated, and more dynamic. Beyond that, there are countless ways in which APIs, protocols, platforms, and other technologies will meld to produce the highly connected world of the future.

Industry Speak
Why Every Enterprise Needs a Softphone?

Jatin Desai
Marketing Manager,
Matrix Comsec Pvt. Ltd.

With over 80 percent of corporations using unified communications, it is no surprise that softphones have a growing market. Softphone essentially shifts desk phone functionalities to smartphone or desktop computer. This means that a user can place calls and receive them through the extended communication endpoints. Furthermore, it offers additional features such as video calling, using the smartphone or desktop computer hardware.

Apart from being clutter free and efficient, softphones have following benefits:

Unbounded reachability. Reduce call cost while travelling to another state or country. Convert a laptop/smartphone into a user endpoint. Hold audio conferences with team members across the globe. Softphones require only a device and the setup API.

Low cost of procurement. Most of the established businesses already have a communication system in place.

Integration. All contacts are stored in one location with Corporate Global Directory integration for easy access. No need to save each contact in smartphone; Moreover, group contacts, and drag-and-drop conference for meetings are also features that this solution offers.

Reachability. Contact anyone from anywhere at any time. It enables quick decision making with enhanced team engagement. Mobile charges may be reduced through desktop computer extension while outside the state or the country.

Ease of Use. One-touch access to extension numbers with 1000 direct station selection keys. It gives real-time status of colleagues with 600 busy lamps field keys.

Intuitive Interface. Search or dial contact name or extension directly from the search pad. Intuitive graphics and design are provided for a user-friendly experience. Users can personalize their interface by marking favorite contacts and contact grouping for quick connectivity.

With all these benefits and much more, Matrix VARTA is the perfect softphone solution for business communications.

Indian Market Dynamics

The Indian IT infrastructure market in 2018 is estimated at Rs 19,334.19 crore. Enterprise network equipment dominated with a 46.7 percent share, at Rs 9024.9 crore, closely followed by servers at Rs 8661.09 crore. Storage systems had a 8.5 percent share at Rs 1648.20 crore.

Indian networking market includes Ethernet switches, routers, and WLAN segments.

Ethernet Switches. The market for Ethernet switches is estimated at Rs 3916.82 crore in 2018. Cisco continues to dominate the Ethernet switch market with a 62.8 percent share in 2018, followed by Hewlett Packard Enterprise (HPE) and Huawei.

Application delivery controller (ADC) and Layer-3 categories predominantly drove the overall growth with high double-digit individual YoY rise, while Layer-2 also saw a YoY growth, though only marginal. The top five verticals were telecom, banking, professional services, government, and education. Government’s push towards digitization, through upgrade of public infrastructure and multiple smart city initiatives; telecom infrastructure modernization drives; and banking sector’s continual investment in network infrastructure to improve customer experience, are expected to drive growth in the coming quarters. Digital transformation initiatives across organizations would also generate incremental revenues.

Enterprise Routers. The market for routers is estimated at Rs 3696.39 crore in 2018. Cisco continues to lead the router market with a 68.6 percent market share in 2018, followed by Nokia and Huawei. Nokia and Huawei witnessed high-double-digit growth on the back of a few big-ticket wins in the telecom space.

The growth in 2018 was primarily driven by the enterprise segment due to a large multimillion-dollar deal from the government. The router market also witnessed strong growth in the service provider segment due to network upgrades and 4G VoLTE expansion investments from telecommunications. With the launch of 5G roadmap and commercialization just a few years away, the service provider segment is expected to continue investments in the coming years. Government initiatives around Digital India would drive incremental revenues in the coming quarters.

WLAN.The market for WLAN is estimated at Rs 1411.69 crore in 2018. Cisco retained the top spot in the WLAN market with a 22.4 percent market share in 2018, followed by HPE and TP-Link (D Link).

While all the segments, i.e., consumer, enterprise, and service provider witnessed YoY growth, enterprise segment stood out as the key contributor for incremental growth in 2018.

Enterprise investment in mobility-friendly networks and government investment in improving wireless infrastructure for the masses as well as in smart city projects were the key drivers for growth in the WLAN market in India.

Outlook.The Ethernet switch, router, and WLAN market is collectively expected to grow in single digits in terms of compound annual growth rate (CAGR) for 2018–2023. Increased adoption of emerging technologies, such as cloud, IoT, and mobility would drive incremental revenues. IDC also expects large investments for 5G rollouts in the next couple of years.

Networking is the backbone for any of the IT transformation initiatives. Networking systems will need to be more agile, and scalable with better control and security, to enable organizations to adapt quickly to business innovations.

Software-defined networking would be of absolute necessity for faster time to market and optimizing the network resources. With the advent of software-defined networking (SDN) and SD-WAN technologies, the landscape of networking architecture is quickly changing. OEMs should address the developing business and deployment models, since the market will adopt subscription-led networking procurement over traditional networking hardware spend.

x86 servers. In 2018, the top two vendors kept their positions in the x86 server market. HPE led the India x86 server market with revenue share of 19.8 percent to reach Rs 1562.84 crore, followed by Dell with a share of 19.5 percent to reach Rs 1533.81 crore. The major deals for HPE came from telecommunications and professional services verticals, while Dell successfully registered incremental deals from existing customers across professional services and manufacturing, and consolidated their business in existing EMC accounts. Lenovo had overtaken Cisco as third largest server vendor in India during 2Q 2018, due to a big win from one of the largest public cloud service providers. In 3Q, it improved its share with new product portfolio and channel programs, while major wins for Cisco came from professional services and banking. Cisco came fourth, winning customers across different verticals with a revenue share of 3.02 percent. Also, ODM direct market share accounted for 17.7 percent in 2018.

Professional services, manufacturing, communications and media, and the government accounted for about 85 percent of overall x86 server market revenue. Government saw the biggest YoY growth owing to the investments coming from various federal government departments and local state government projects.

The blade-and-rack servers, which contribute around 80 percent revenue share, have seen a surge in their ASPs due to the higher core, memory, and processing configurations for newer workloads demanding higher IOPS, with a higher preference for mid-range servers. The Intel-based x86 platforms are robust and provide the price-performance balance for enterprises looking to deploy these applications for their end users. However, large enterprises from the data-intensive industries, such as banking and telcos, still prefer to use the non-x86 platforms to run their core applications demanding higher availability and performance.

Non x86 servers. In 2018, banking remained the top vertical, followed by manufacturing and professional services. Other popular verticals for non-x86 servers were utilities, education, and insurance.

Outlook

The economic scenario in India looks promising with private sector investments helping growth despite the slowdown effect earlier. The IT server spend is expected to grow through the government’s effort to ramp up the work in smart cities and other Digital India initiatives.

Modernization of traditional infrastructure remains as the core priority for the enterprises across different verticals in India. Almost more than 90 percent of the enterprises are planning to invest in digital initiatives, from creating new business models to reimagining their existing business through process reengineering to attract and retain their existing customers and enhancing their customer experiences, creating a demand for the compute to meet these business objectives.

Legacy infrastructures and applications are getting modernized across organizations of all sizes and scales. Compute platform remains at the core of organizational priority to support various applications to serve customers across all facets of their journey.

Government remains the major driver of growth for the server market with ongoing smart city projects, NSM, HPC, and other government-led initiatives expected to fuel the growth of server market in the coming quarters. However, the General Election in 2019 will be affecting the growth of server market because of lower government spend. Tier-I telcos’ spend would be directed towards expanding VoLTE across different circles, modernizing infra for the 5G roll outs, and virtualizing the RAN for better control and network performance. Telco investments are expected to continue throughout 2019 and 2020. Refresh from some of the banks are expected in 2019, while manufacturing spend would be focussed towards ERP upgrades and automation in SCM and operational processes, creating a demand for compute throughout 2019.

External Storage

The storage scene in India is seeing growth and leading the information transformation. Budgetary pressures and dynamic business priorities are pushing organizations to consider new deployment models to procure infrastructure. Majority of the OEMs are focusing on new technologies and innovative pricing models to ensure traditional external storage consumption in the market in the wake of increasing acceptance of cloud storage solutions across organizations. With unabated data growth, highly available data and instant information delivery is what matter to business.

The Indian market for external enterprise storage systems market is estimated at Rs 22156.9 crore in 2018, an increase of 16.7 percent over the last year. Dell EMC is the undisputed leader in the storage market, with a 26.2-percent share in the mid-range segment. HPE is the number two vendor with 18.7 percent share. NetApp, IBM, and Hitachi are the other leading players in India’s external storage market.

The all-flash array (AFA) is 37 percent of all storage shipped, poised to constitute 43 percent share by 2022. Adoption of all flash arrays (AFAs) offers better technical advance and performance at an affordable price, which is benefiting customer due to competitive vendor environment. Organizations are actively considering flash options and are willing to pay the additional price premium to avail best in class performance. Majority of the vendors have started offering NVMe-based flash arrays to drive an incremental growth in the coming quarters. Hybrid flash array segment too saw an upswing, while all-hard-disk-drive segment continued to decline. Across industries, there was an increased consumption of solid-state drives (SSDs) over hard disk drives (HDD) for better performance of different workloads.

Midrange external storage segment saw an exponential YoY growth and continued to lead the market constituting more than 60 percent of the total external storage market, while both entry-level and high-end storage segments declined in 2018. Availability of enterprise class features in midrange storage systems is propelling the growth for midrange storage arrays. Smaller external storage OEMs witnessed a significant YoY growth due to large multi-million-dollar deals from professional services organizations in 3Q 2018.

Professional services, banking, manufacturing, telecommunications, and government industries contributed close to 80 percent of overall external storage market in 2018.

“IT departments are facing challenges in accommodating the LOB demands on scalability and agility for faster time to market and better customer experience. Organizations are creating more data value, and monetization means by leveraging new architectures/storage solutions”, says Ranganath Sadasiva, Director, Enterprise, IDC India.

Outlook

There is a huge potential for India and the market is expected to grow by 8 percent in the next three to four years. Spend in the 3rd platform technologies and digital transformation initiatives from banking vertical for artificial intelligence and government initiatives around digitization, smart cities, Make in India, and e-governance projects across industries would drive incremental revenues in the coming quarters.

Data is primarily based on IDC market research.

“Enterprises are progressively adopting high-speed Ethernet switches, 25Gb and 100Gb, and software solutions such as SD-WAN, to meet the requirements of high bandwidth consumption, cloud-based application, and growing mobile enterprise endpoints. IDC expects this trend to sustain in the coming quarters as OEMs design products around these requirements.”

Ankush Dagar
Senior Market Analyst, Enterprise Networking,
IDC India.

“Mobile workforce, anytime anywhere access to enterprise networks, security across multiple channels, and shift toward cloud-based application workload are key drivers for investment in network infrastructure. As organizations start their Future of Work transformation journeys, IDC expects a growth in adoption of software-defined products and solutions, such as SD-WAN and SDN-enabled Ethernet switches.”

Dileep Nadimpalli
Research Manager, Storage,
IDC India

“Increased acceptance of openness in networking platforms by organisations is changing the landscape of networking, aided by emerging technologies and accelerating digital transformation initiatives. Reconceptualizing network architecture is mandatory for organisations. Initiatives around citizen digital empowerment, Innovation accelerator technologies such as IoT, AR/VR, robotics, connectivity enhancement initiatives like 5G/VoLTE rollouts, Wi-Fi campus, hotspots, etc., are expected to increase the spending on networking in the coming quarters.”

Ranganath Sadasiva
Director Enterprise,
IDC India

“In 2018, end users have embraced memory-centric computing with higher cores and CPU configurations, resulting into YoY growth of server ASP. The industry’s journey continues to evolve from large SMP machines to scale out in the coming years.”